WHIPPANY, N.J., May 5, 2022
/PRNewswire/ -- Suburban Propane Partners, L.P. (NYSE:SPH),
today announced earnings for its second quarter ended March 26, 2022.
Net income for the second quarter of fiscal 2022 was
$175.1 million, or $2.77 per Common Unit, compared to $127.2 million, or $2.03 per Common Unit, in the fiscal 2021 second
quarter. Adjusted earnings before interest, taxes, depreciation and
amortization (Adjusted EBITDA, as defined and reconciled below)
increased $0.5 million, or 0.3%, to
$172.5 million for the second quarter
of fiscal 2022, compared to $172.0
million in the prior year.
In announcing these results, President and Chief Executive
Officer Michael A. Stivala said,
"The fiscal 2022 second quarter was another outstanding quarter for
Suburban Propane -- delivering solid operating results, making
progress on the execution of our long-term strategic initiatives
and continuing to improve our financial metrics. Despite a
challenging operating environment resulting from an erratic weather
pattern, historically high commodity prices and inflationary
factors impacting expenses, we were able to expand our customer
base, and effectively manage margins and expenses to deliver an
improvement in Adjusted EBITDA compared to the prior year second
quarter, and a $7.0 million, or 2.8%,
increase for the first six months of the fiscal year.
Additionally, in support of our long-term strategic growth plans,
we further strengthened our balance sheet by reducing total debt by
nearly $42.0 million during the
second quarter."
Mr. Stivala continued, "In addition to the improvement in
earnings and leverage metrics, we took several steps to advance our
Go Green with Suburban
Propane corporate pillar, starting with the creation of our
new subsidiary, Suburban Renewable Energy, LLC, to serve as the
platform for our investments in innovative, renewable energy
technologies and businesses. During March 2022, we acquired a 25% equity stake in
Independence Hydrogen, Inc., a veteran-owned and operated
start-up company developing a gaseous hydrogen ecosystem, for
$30.0 million. We also made
additional investments in Oberon Fuels, to support the
commercialization of renewable dimethyl ether (rDME) as a blend
with propane; including our construction of the world's first
commercial Propane+rDME blending facility in our Placentia, California location. We are
continuing to position the business, both operationally and
financially, for long-term growth and sustainability, and to
support the energy transition to a lower carbon future."
Retail propane gallons sold in the second quarter of fiscal 2022
of 159.2 million gallons decreased 5.8% compared to the prior year,
primarily due to elevated customer tank levels coming into the
quarter given the impact of near record warm temperatures during
the month of December 2021,
unseasonably warm and inconsistent temperatures throughout the
second quarter, and customer conservation stemming from the high
commodity price environment. According to the National
Oceanic and Atmospheric Administration, average temperatures (as
measured by heating degree days) across all of the Partnership's
service territories during the second quarter were 7% warmer than
normal and similar to the prior year second quarter.
Average propane prices (basis Mont
Belvieu, Texas) for the second quarter of fiscal 2022
increased 44.5% compared to the prior year, and 4.7% compared to
the prior sequential quarter. Total gross margin for the
second quarter of fiscal 2022 was $349.1
million, compared to $305.7
million in the prior year. Gross margin for the second
quarter of fiscal 2022 included a $33.0
million unrealized gain attributable to the mark-to-market
adjustment for derivative instruments used in risk management
activities, compared to a $1.6
million unrealized gain in the prior year. These
non-cash adjustments, which were reported in cost of products sold,
were excluded from Adjusted EBITDA for both periods.
Excluding the impact of the unrealized mark-to-market adjustments,
total gross margin of $316.1 million
for the second quarter of fiscal 2022 increased $12.0 million, or 4.0%, compared to the prior
year, primarily due to prudent margin management during a rising
and volatile commodity price environment, as well as from the
favorable impact of commodity hedges that matured during the
period. The Partnership's hedging and risk management
activities are intended to reduce the effect of price volatility
associated with forecasted purchases of propane, including propane
sold on a fixed price basis. The commodity hedges that
matured during the second quarter of fiscal 2022 were principally
comprised of net long positions that were favorably impacted from
the significant rise in commodity
prices.
Combined operating and general and administrative expenses of
$143.0 million for the second quarter
of fiscal 2022 increased 9.1% compared to the prior year, primarily
due to higher payroll and benefit-related expenses, higher vehicle
lease and fuel costs, higher provisions for doubtful accounts, as
well as other inflationary effects on the Partnership's operating
costs.
During the second quarter of fiscal 2022, the Partnership
utilized cash flows from operating activities to repay $41.9 million in debt, purchase a 25% equity
stake in Independence Hydrogen for $30.0
million, and make additional investments in Oberon Fuels in
support of the Partnership's long-term strategic goal of building
out a renewable energy platform. As a result of the debt
repayment and the increase in Adjusted EBITDA during the second
quarter, the Consolidated Leverage Ratio, as defined in the
Partnership's credit agreement, for the trailing twelve-month
period ending March 26, 2022 improved
to 3.87x.
As previously announced on April 21,
2022, the Partnership's Board of Supervisors declared a
quarterly distribution of $0.325 per
Common Unit for the three months ended March
26, 2022. On an annualized basis, this distribution
rate equates to $1.30 per Common
Unit. The distribution is payable on May 10,
2022 to Common Unitholders of record as of May 3, 2022.
About Suburban Propane Partners,
L.P.
Suburban Propane Partners, L.P. ("Suburban Propane") is a
publicly traded master limited partnership listed on the New York
Stock Exchange. Headquartered in Whippany, New Jersey, Suburban Propane has
been in the customer service business since 1928 and is a
nationwide distributor of propane, renewable propane, fuel oil and
related products and services, as well as a marketer of natural gas
and electricity and an investor in low carbon fuel alternatives,
servicing the energy needs of approximately 1 million residential,
commercial, governmental, industrial and agricultural customers
through approximately 700 locations across 42 states.
Suburban Propane is supported by three core pillars: (1)
Suburban Commitment – showcasing Suburban Propane's
90+ year legacy, and ongoing commitment to the highest standards
for dependability, flexibility, and reliability that underscores
Suburban Propane's commitment to excellence in customer service;
(2) SuburbanCares – highlighting continued dedication
to giving back to local communities across Suburban Propane's
national footprint; and (3) Go
Green with Suburban Propane - promoting the clean
burning and versatile nature of propane and renewable propane as a
bridge to a green energy future and developing the next generation
of renewable energy. For additional information on Suburban
Propane, please visit www.suburbanpropane.com.
Forward-Looking
Statements
This press release contains certain forward-looking
statements relating to future business expectations and financial
condition and results of operations of the Partnership, based on
management's current good faith expectations and beliefs concerning
future developments. These forward-looking statements are
subject to certain risks and uncertainties that could cause actual
results to differ materially from those discussed or implied in
such forward-looking statements, including the following:
- The impact of weather conditions on the demand for propane,
fuel oil and other refined fuels, natural gas and
electricity;
- Volatility in the unit cost of propane, fuel oil and other
refined fuels, natural gas and electricity, the impact of the
Partnership's hedging and risk management activities, and the
adverse impact of price increases on volumes sold as a result of
customer conservation;
- The impact of the COVID-19 pandemic and the corresponding
government response, including the impact across the Partnership's
businesses on demand and operations, as well as on the operations
of the Partnership's suppliers, customers and other business
partners, and the effectiveness of the Partnership's actions taken
in response to these risks;
- The ability of the Partnership to compete with other
suppliers of propane, fuel oil and other energy sources;
- The impact on the price and supply of propane, fuel oil and
other refined fuels from the political, military or economic
instability of the oil producing nations, including the
Russia/Ukraine conflict, global terrorism and other
general economic conditions, including the economic instability
resulting from natural disasters such as pandemics, including the
COVID-19 pandemic;
- The ability of the Partnership to acquire sufficient volumes
of, and the costs to the Partnership of acquiring, transporting and
storing, propane, fuel oil and other refined fuels;
- The ability of the Partnership to acquire and maintain
reliable transportation for its propane, fuel oil and other refined
fuels;
- The ability of the Partnership to attract and retain
employees and key personnel to support the growth of our
business;
- The ability of the Partnership to retain customers or
acquire new customers;
- The impact of customer conservation, energy efficiency and
technology advances on the demand for propane, fuel oil and other
refined fuels, natural gas and electricity;
- The ability of management to continue to control expenses
and manage inflationary increases in fuel, labor and other
operating costs;
- The impact of changes in applicable statutes and government
regulations, or their interpretations, including those relating to
the environment and climate change, derivative instruments and
other regulatory developments on the Partnership's
business;
- The impact of changes in tax laws that could adversely
affect the tax treatment of the Partnership for income tax
purposes;
- The impact of legal proceedings on the Partnership's
business;
- The impact of operating hazards that could adversely affect
the Partnership's operating results to the extent not covered by
insurance;
- The Partnership's ability to make strategic acquisitions and
successfully integrate them;
- The ability of the Partnership to continue to combat
cybersecurity threats to its networks and information
technology;
- The impact of current conditions in the global capital and
credit markets, and general economic pressures;
- The operating, legal and regulatory risks the Partnership
may face; and
- Other risks referenced from time to time in filings with the
Securities and Exchange Commission ("SEC") and those factors listed
or incorporated by reference into the Partnership's Annual Report
under "Risk Factors."
Some of these risks and uncertainties are discussed in more
detail in the Partnership's Annual Report on Form 10-K for its
fiscal year ended September 25, 2021
and other periodic reports filed with the SEC. Readers are
cautioned not to place undue reliance on forward-looking
statements, which reflect management's view only as of the date
made. The Partnership undertakes no obligation to update any
forward-looking statement, except as otherwise required by
law.
Suburban Propane
Partners, L.P. and Subsidiaries
Consolidated
Statements of Operations
For the Three and
Six Months Ended March 26, 2022 and March 27, 2021
(in thousands,
except per unit amounts)
(unaudited)
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
March 26, 2022
|
|
|
March 27, 2021
|
|
|
March 26, 2022
|
|
|
March 27, 2021
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
$
|
516,821
|
|
|
$
|
481,328
|
|
|
$
|
847,938
|
|
|
$
|
749,952
|
|
Fuel oil and refined fuels
|
|
|
43,501
|
|
|
|
32,011
|
|
|
|
64,467
|
|
|
|
47,761
|
|
Natural gas and electricity
|
|
|
14,395
|
|
|
|
10,750
|
|
|
|
23,618
|
|
|
|
17,626
|
|
All
other
|
|
|
13,378
|
|
|
|
13,149
|
|
|
|
27,479
|
|
|
|
27,090
|
|
|
|
|
588,095
|
|
|
|
537,238
|
|
|
|
963,502
|
|
|
|
842,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold
|
|
|
239,031
|
|
|
|
231,567
|
|
|
|
435,369
|
|
|
|
334,946
|
|
Operating
|
|
|
119,418
|
|
|
|
109,188
|
|
|
|
225,148
|
|
|
|
207,167
|
|
General and administrative
|
|
|
23,623
|
|
|
|
21,980
|
|
|
|
43,421
|
|
|
|
40,110
|
|
Depreciation and amortization
|
|
|
14,062
|
|
|
|
27,346
|
|
|
|
30,347
|
|
|
|
55,363
|
|
|
|
|
396,134
|
|
|
|
390,081
|
|
|
|
734,285
|
|
|
|
637,586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
191,961
|
|
|
|
147,157
|
|
|
|
229,217
|
|
|
|
204,843
|
|
Interest expense,
net
|
|
|
15,254
|
|
|
|
18,092
|
|
|
|
30,553
|
|
|
|
36,227
|
|
Other, net
|
|
|
1,234
|
|
|
|
1,582
|
|
|
|
2,364
|
|
|
|
2,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision
for (benefit from) income taxes
|
|
|
175,473
|
|
|
|
127,483
|
|
|
|
196,300
|
|
|
|
165,956
|
|
Provision for (benefit
from) income taxes
|
|
|
371
|
|
|
|
267
|
|
|
|
(100)
|
|
|
|
763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
175,102
|
|
|
$
|
127,216
|
|
|
$
|
196,400
|
|
|
$
|
165,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per Common
Unit - basic
|
|
$
|
2.77
|
|
|
$
|
2.03
|
|
|
$
|
3.11
|
|
|
$
|
2.64
|
|
Weighted average number
of Common Units
outstanding -
basic
|
|
|
63,268
|
|
|
|
62,744
|
|
|
|
63,150
|
|
|
|
62,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per Common
Unit - diluted
|
|
$
|
2.74
|
|
|
$
|
2.02
|
|
|
$
|
3.09
|
|
|
$
|
2.62
|
|
Weighted average number
of Common Units
outstanding -
diluted
|
|
|
63,796
|
|
|
|
63,088
|
|
|
|
63,612
|
|
|
|
62,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (a)
|
|
$
|
204,789
|
|
|
$
|
172,921
|
|
|
$
|
257,200
|
|
|
$
|
257,546
|
|
Adjusted EBITDA
(a)
|
|
$
|
172,520
|
|
|
$
|
172,038
|
|
|
$
|
259,046
|
|
|
$
|
252,059
|
|
Retail gallons
sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
|
159,179
|
|
|
|
169,059
|
|
|
|
264,444
|
|
|
|
280,741
|
|
Refined fuels
|
|
|
10,715
|
|
|
|
11,041
|
|
|
|
16,849
|
|
|
|
17,447
|
|
Capital
expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance
|
|
$
|
5,388
|
|
|
$
|
3,817
|
|
|
$
|
9,758
|
|
|
$
|
6,605
|
|
Growth
|
|
$
|
6,258
|
|
|
$
|
4,642
|
|
|
$
|
12,561
|
|
|
$
|
7,666
|
|
|
|
(a)
|
EBITDA represents net
income before deducting interest expense, income taxes,
depreciation and amortization. Adjusted EBITDA represents EBITDA
excluding the unrealized net gain or loss on mark-to-market
activity for derivative instruments and other items, as applicable,
as provided in the table below. Our management uses EBITDA and
Adjusted EBITDA as supplemental measures of operating performance
and we are including them because we believe that they provide our
investors and industry analysts with additional information that we
determined is useful to evaluate our operating results.
|
EBITDA and Adjusted EBITDA are not recognized terms under
accounting principles generally accepted in the United States of America ("US GAAP") and
should not be considered as an alternative to net income or net
cash provided by operating activities determined in accordance with
US GAAP. Because EBITDA and Adjusted EBITDA as determined by
us excludes some, but not all, items that affect net income, they
may not be comparable to EBITDA and Adjusted EBITDA or similarly
titled measures used by other companies.
The following table sets forth our calculations of EBITDA and
Adjusted EBITDA:
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
March 26, 2022
|
|
|
March 27, 2021
|
|
|
March 26, 2022
|
|
|
March 27, 2021
|
|
Net income
|
|
$
|
175,102
|
|
|
$
|
127,216
|
|
|
$
|
196,400
|
|
|
$
|
165,193
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (benefit from) income taxes
|
|
|
371
|
|
|
|
267
|
|
|
|
(100)
|
|
|
|
763
|
|
Interest expense, net
|
|
|
15,254
|
|
|
|
18,092
|
|
|
|
30,553
|
|
|
|
36,227
|
|
Depreciation and amortization
|
|
|
14,062
|
|
|
|
27,346
|
|
|
|
30,347
|
|
|
|
55,363
|
|
EBITDA
|
|
|
204,789
|
|
|
|
172,921
|
|
|
|
257,200
|
|
|
|
257,546
|
|
Unrealized non-cash (gains) losses on changes in fair value
of derivatives
|
|
|
(32,984)
|
|
|
|
(1,638)
|
|
|
|
521
|
|
|
|
(6,493)
|
|
Pension settlement charge
|
|
|
—
|
|
|
|
570
|
|
|
|
—
|
|
|
|
570
|
|
Equity in earnings of unconsolidated affiliate
|
|
|
715
|
|
|
|
185
|
|
|
|
1,325
|
|
|
|
436
|
|
Adjusted
EBITDA
|
|
$
|
172,520
|
|
|
$
|
172,038
|
|
|
$
|
259,046
|
|
|
$
|
252,059
|
|
We also reference gross margins, computed as revenues less cost
of products sold as those amounts are reported on the condensed
consolidated financial statements. Our management uses gross
margin as a supplemental measure of operating performance and we
are including it as we believe that it provides our investors and
industry analysts with additional information that we determined is
useful to evaluate our operating results. As cost of
products sold does not include depreciation and amortization
expense, the gross margin we reference is considered a non-GAAP
financial measure.
The unaudited financial information included in this document
is intended only as a summary provided for your convenience, and
should be read in conjunction with the complete consolidated
financial statements of the Partnership (including the Notes
thereto, which set forth important information) contained in its
Quarterly Report on Form 10-Q to be filed by the Partnership with
the SEC. Such report, once filed, will be available on
the public EDGAR electronic filing system maintained by the
SEC.
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SOURCE Suburban Propane Partners, L.P.